FCA PS24/3: Understanding the new requirements and how to prepare

The Financial Conduct Authority (FCA) has introduced policy statement PS24/3, implementing mandatory Product Sales Data (PSD) reporting for consumer credit firms. This significant change will reshape how affected companies collect, manage, and report data. Our blog post breaks down the key aspects of these new requirements and offers guidance to help your organisation strategically prepare for implementation.

Background and rationale

The FCA took over consumer credit regulation from the Office of Fair Trading in 2014. Since then, the FCA has reviewed the regulatory framework to enhance market oversight and strengthen consumer safeguards. The newly introduced Product Sales Data (PSD) reporting requirements are a direct outcome of this ongoing process.

The FCA's goals for implementing these changes include:

- Better understanding of firm operations and market insights

- More effective authorisation and supervision of firms

- Quicker intervention in cases of potential consumer harm

- Reduced reliance on ad hoc information requests

These returns will play a fundamental role in the FCA’s oversight of the consumer credit market allowing them to focus interventions where they are most needed and where they will have the biggest impact in protecting consumers.

Who is affected by the PS24/3 changes?

The new requirements apply to:

- Firms engaged in consumer credit lending

- Firms that advise, represent, or provide software to support regulatory reporting for consumer credit lenders

To be subject to these requirements, firms must have at least £2 million in outstanding balances and/or new advances.

PS24/3 key requirements

Here’s a quick summary:

1. Quarterly reporting: Firms must submit new PSD returns on a quarterly basis.

2. Three components: The returns comprise Sales PSD, Performance PSD, and Back Book PSD.

3. Comprehensive data: Firms will report on core agreement data, borrower affordability, charges, fees, arrears, and forbearance.

4. Extensive data points: A total of 347 data elements are specified, though not all will apply to every firm.

5. Implementation timeline: The first returns are due as early as October 2025, with a phased approach to implementation.

Given the stated FCA timescales, this will require considerable focus in the immediate short term. Firms affected by the changes will need to ensure their reporting is in line with the changes set out in the FCA policy statement. Plus, they will need to implement the changes within the prescribed timescales, which are that this will be phased in over time with the first returns due as early as October 2025.

Additionally, these changes will require budget allocation in the coming Financial Year, reiterating the need for early review.

PS23/4 challenges and considerations

The scale of these new requirements is significant and may pose challenges for many firms. Here are some key challenges and considerations to pay attention to:

• Data availability: Not all required data elements may be currently captured or easily accessible.

• System changes: Firms may need to implement new processes or modify existing systems to collect and store the required data.

• Resource allocation: Significant time and budget may be required to meet these new requirements.

• Data quality: Ensuring the accuracy and reliability of reported data will be crucial.

Preparing for PS24/3 compliance: Recommended actions

The magnitude of this new requirement is undeniable. Larger impacted firms may possess the in-house technical capacity to manage this, albeit at the cost of diverting resources from other opportunities. Smaller firms, however, will likely need to implement substantial new processes and changes, potentially necessitating external assistance.

To help firms meet the FCA's deadline and ensure compliance, we've compiled the following recommendations:

1. Conduct a data audit

🟡Review your current data availability and identify gaps in your collection and storage processes.

A review and assessment around what data is available already, and where system changes are required to collect the data required.

2. Develop a data integration strategy

🟡Ensure that all required data can be reliably brought together in a central data store, such as a data warehouse or data lake.

Ensure existing and new feeds can reliably bring the required data together into a central Data Store – for example a Data Warehouse or Data Lake. This can either be a brand-new entity, or an extension to something already in place.

3. Create FCA data feeds

🟡Develop standardised processes for generating the required quarterly reports.

4. Implement data quality measures

🟡Establish ongoing validation processes to maintain data accuracy and reliability.

Data Quality can be an issue when dealing with captured data. An ongoing validation of the data to ensure that no quality issues are creeping in is imperative.